Archive for the ‘Related Civil Litigation’ Category

Stemming Shareholder Litigation – Including In The FCPA Context – Through A Bylaw Provision

Tuesday, May 27th, 2014

In this era of FCPA enforcement plaintiffs’ lawyers representing shareholders often target directors and executive officers of companies subject to FCPA scrutiny with civil suits alleging, among other things, breach of fiduciary duty or securities fraud. Indeed, as noted in this Forbes column “plaintiff lawyers have joined the bribery racket.”

Numerous previous posts (see here for instance) have highlighted how, within days of FCPA scrutiny or an enforcement action, plaintiffs’ firms launch so-called “investigations” and FCPA-related civil suits begin to pour in.

When a company’s FCPA violations are the result of board of director or executive officer conduct, or the condoning or encouraging of such conduct by those with fiduciary duties, such civil suits or investigations would seem to be warranted and in the public interest.  While there have been a few such FCPA enforcement actions (Siemens and BizJet come to mind), in the vast majority of FCPA enforcement actions the enforcement agencies do not allege any knowledge, participation or acquiescence in the conduct at issue by the board of directors or executive officers.

Given the frequency in which shareholder litigation follows an FCPA enforcement action or instance of FCPA scrutiny, and given the largely unsuccessful track record of such cases surviving the motion to dismiss stage, the question ought to be asked – does the majority of shareholder litigation in the FCPA context serve a purpose or are such actions merely parasitic attempts to feed-off of FCPA scrutiny and enforcement in this new era?

Indeed, as highlighted in this previous post, FCPA-related civil litigation was identified as a area of litigation abuse in House testimony.  Among other things, it was noted:

“[Shareholder class actions]serve no purpose but to take money from current shareholders and transfer it to former (or other) shareholders – with a hefty slice cut out for the plaintiffs’ lawyers.”

“Derivative shareholder suits are equally problematic in this arena. These suits tend to target senior officers and directors, not the employees who actually paid any bribes or condoned others paying them. The reason is simple enough: directors and officers are backed by the deep pockets of the company’s D&O insurer; culpable employees have little money to pay in private civil damages, especially if they themselves have been the target of an individual enforcement proceeding.”

As with many things in this new era of FCPA enforcement, FCPA related shareholder litigation seems to have spiraled out of control and FCPA practitioners rightly observed:

“Setbacks in court do not appear to have slowed the pace of new cases filed against corporations and their directors after FCPA disclosures. As the DOJ and SEC bring more cases, and as more companies voluntarily disclose potential FCPA violations, the trend of related civil litigation is likely to continue. In attempting to satisfy the expectations of the DOJ and SEC, a company’s thorough internal investigation may also serve as the roadmap for a civil litigant. Companies negotiating with the DOJ and SEC must therefore balance the government’s requests for the results of internal investigations with the risk of waiver of privilege and subsequent production to civil litigants. As a result of these practical considerations, reputational risk, and expenses involved in litigation, companies targeted by civil suits will feel pressure to settle, potentially even before the DOJ or SEC takes action.”

The above is all necessary background in highlighting an important decision from the Delaware Supreme Court.  In this recent decision, the court addressed the validity of a fee-shifting provision (which shifted attorneys’ fees and costs to unsuccessful plaintiffs in intra-corporate litigation) in a Delaware non-stock corporation’s bylaws.

Although the court’s opinion arose in the context of a non-stock corporation, the decision discussed the validity of such a bylaw provision under Delaware General Corporate Law – the law of choice for many corporations.

The Delaware Supreme Court stated:

“Under Delaware law, a corporation’s bylaws are “presumed to be valid, and the courts will construe the bylaws in a manner consistent with the law rather than strike down the bylaws.” To be facially valid, a bylaw must be authorized by the Delaware General Corporation Law (DGCL), consistent with the corporation’s certificate of incorporation, and its enactment must not be otherwise prohibited.

That, under some circumstances, a bylaw might conflict with a statute, or operate unlawfully, is not a ground for finding it facially invalid.

A fee-shifting bylaw, like the one described in the first certified question, is facially valid. Neither the DGCL nor any other Delaware statute forbids the enactment of fee-shifting bylaws. A bylaw that allocates risk among parties in intra-corporate litigation would also appear to satisfy the DGCL’s requirement that bylaws must “relat[e] to the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its stockholders, directors, officers or employees.” The corporate charter could permit fee-shifting provisions, either explicitly or implicitly by silence.  Moreover, no principle of common law prohibits directors from enacting fee-shifting bylaws.

Delaware follows the American Rule, under which parties to litigation generally must pay their own attorneys’ fees and costs. But it is settled that contracting parties may agree to modify the American Rule and obligate the losing party to pay the prevailing party’s fees. Because corporate bylaws are “contracts among a corporation’s shareholders,” a fee-shifting provision contained in a nonstock corporation’s validly-enacted bylaw would fall within the contractual exception to the American Rule. Therefore, a fee-shifting bylaw would not be prohibited under Delaware common law.

Whether the specific … fee-shifting bylaw [at issue] is enforceable, however, depends on the manner in which it was adopted and the circumstances under which it was invoked. Bylaws that may otherwise be facially valid will not be enforced if adopted or used for an inequitable purpose. In the landmark Schnell v. Chris-Craft Industries decision, for example, this Court set aside a board-adopted bylaw amendment that moved up the date of an annual stockholder meeting to a month earlier than the date originally scheduled.  The Court found that the board’s purpose in adopting the bylaw and moving the meeting was to “perpetuat[e] itself in office” and to “obstruct[] the legitimate efforts of dissident stockholders in the exercise of their rights to undertake a proxy contest against management.” The Schnell Court famously stated that “inequitable action does not become permissible simply because it is legally possible.”

More recently, in Hollinger International, Inc. v. Black, the Court of Chancery addressed bylaw amendments, enacted by a controlling shareholder, that prevented the board “from acting on any matter of significance except by unanimous vote” and “set the board’s quorum requirement at 80%,” among other changes. The Court of Chancery found, and this Court agreed, that the bylaw amendments were ineffective because they “were clearly adopted for an inequitable purpose and have an inequitable effect.” That finding was based on an extensive review of the facts surrounding the controller’s decision to amend the bylaws.

Conversely, this Court has upheld similarly restrictive bylaws that were enacted for proper purposes. In Frantz Manufacturing Co. v. EAC Industries, a majority stockholder amended the corporation’s bylaws by written consent in order to “limit the [] board’s anti-takeover maneuvering after [the stockholder] had gained control of the corporation.” The amended bylaws, like those invalidated in Hollinger, increased the board quorum requirement and mandated that all board actions be unanimous. The Court found that the bylaw amendments were “a permissible part of [the stockholder’s] attempt to avoid its disenfranchisement as a majority shareholder” and, thus, were “not inequitable under the circumstances.”

[...]

[W]e are able to say only that a bylaw of the type at issue here is facially valid, in the sense that it is permissible under the DGCL, and that it may be enforceable if adopted by the appropriate corporate procedures and for a proper corporate purpose.”

For additional reading on the recent Delaware Supreme Court decision, see herehere and here.

Who Did Johan Broux Sue?

Wednesday, September 11th, 2013

In all likelihood, in the mind of Johan Broux (and his lawyers at Pomerantz Grossman Hufford Dahlstrom & Gross LLP) last week he sued a company and its executives in U.S. District Court in the Southern District of New York for securities fraud.  According to his class action complaint, the company “is one of the largest oil companies in the world” and has “American Depositary Shares (ADS) and H shares” listed on the New York Stock Exchange since 2000.  According to the complaint, the executives or former executives are:  the Chairman and President of the Company; the Chief Financial Officer of the Company; a former Chairman and acting Chief Executive Officer; and a former Chief Financial Officer.

According to the DOJ and the SEC’s FCPA unit, Broux and his lawyers last week sued the Chinese government and Chinese foreign officials for securities fraud in U.S. Court.  Obviously, the DOJ and SEC’s FCPA unit did not publicly state this, but this is the logical conclusion given the enforcement agencies Foreign Corrupt Practices Act enforcement theory that employees of alleged state-owned companies are “foreign officials” under the FCPA and thus occupy a status on par with foreign presidents, prime ministers and other heads of state.  (This interpretation is currently before the 11th Circuit – see here for the prior post).

Who did Broux sue?  PetroChina and certain of its current or former executives.

As noted in this previous post, various media recently reported that various PetroChina senior executives “are under investigation by authorities for ‘severe disciplinary violations’ and have resigned.”  The media reports noted that “while neither PetroChina nor its parent [company China National Petroleum Corp.] have released specifics of the probes, the phrase ‘severe disciplinary violations’ is typically used by Chinese officials when investigating cases of corruption.”  As noted in the prior post, the interesting thing about this of course is that PetroChina executives are – in the eyes of the enforcement agencies – “foreign officials” under the FCPA while at the same time executives of an issuer subject to the FCPA given that PetroChina’s ADRs trade on the New York Stock Exchange.

Broux’s complaint alleges, in summary fashion, as follows.

“Defendants made false and/or misleading statement, as well as failed to disclose material adverse facts about the Company’s business, operations, and financial performance.  Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company’s senior officials were in non-compliance with the Company’s corporate governance directives and code of ethics; (2) as a result, the Company was subject to investigation and disciplinary action by various governmental and regulatory authorities; (3) the Company’s financial statements were materially false and misleading as they contained direct references to the Company’s code of ethics, and statements regarding its compliance with regulations and internal governance policies; (4) the Company lacked adequate internal and financial controls; and (5), as a result of the foregoing, the Company’s financial statements were materially false and misleading at all relevant times.  As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages.”

Regardless of whether Broux sued an issuer company and its executives or the Chinese government and Chinese “foreign officials” for securities fraud, the PetroChina civil complaint once again demonstrates how FCPA-related civil suits often follow (in certain cases mere days after) instances of FCPA scrutiny.  (See here and here for prior posts).

Friday Roundup

Friday, September 6th, 2013

Interesting, hardly a smoking gun, law enforcement ought not be a competition, quotable, and for the reading stack.  It’s all here in the Friday roundup.

Interesting

An interesting study (here) from Michael Klausner (Nancy and Charles Munger Professor of Business and Professor of Law at Stanford Law School) and Jason Hegland (Project Manager for Stanford Securities Litigation Analytics).  Using a “universe of SEC enforcement actions involving nationally listed firms for violation of disclosure-related rules—fraud, books and records and internal control rules” from 2000 to the present, the authors found, among other things, that only 7 percent of corporate SEC enforcement actions involved no individual defendants.

Such a finding stands in stark contrast to corporate SEC Foreign Corrupt Practices Act enforcement actions.  As noted in this previous post,  since 2008 approximately 80% of corporate SEC FCPA enforcement actions have not (at least yet) resulted in any SEC charges against company employees.  This figure is likely to climb when I re-calculate the statistic to account for 2013 FCPA enforcement.  To date, the SEC has brought four corporate FCPA enforcement and none have resulted (at least yet) in any SEC charges against company employees.

Kudos to Klausner and Hegland for the quality of their data and using the “core” approach.  The authors state:

“We define a “case” in a specific way in order to organize the data. A case, as we use the term, is a set of one or more enforcement actions against a company and/or its executives and/or third parties such as accountants or underwriters for the same misstatement that led to a violation. Thus, if the SEC brings an action against ABC Co and one or more separate actions against ABC Co.’s executives and its outside auditor, all for a misstatement in ABC Co.’s 2012 financial statements, we consider all those separate actions as one “case.””

This is consistent with the “core” approach I use to keep my FCPA statistics.  (See here for the prior post).  The “core” approach is also what the DOJ uses (see here for the prior post).  However, many in FCPA Inc. use other creative counting methods to measure FCPA enforcement and related issues.  This is a huge quality of data issue and completely muddies the conversational waters on many FCPA issues.

Hardly a Smoking Gun

Reuters and other media outlets have carried forward Chinese state media reports as follows.  “A Chinese police investigation into drugmaker GlaxoSmithKline has discovered that alleged bribery of doctors in China was coordinated by the British company and was not the work of individual employees.”

The smoking gun?

Apparently GSK ”had set goals for annual sales growth as high as 25 percent. That rate was 7 to 8 percentage points above the average growth rate for the industry” [according to one of GSK's detained executives] and “GSK implemented salary policies based on sales volumes and such goals could not be achieved without “dubious corporate behavior.”

That is hardly a smoking gun.

Competition

At times it seems like there is a new “global arms race” to see which country can bring the most enforcement actions for the largest dollar value.  Competition is generally good, but law enforcement ought not be a competition where quantity of enforcement becomes more important than quality of enforcement.  Evidence of the former can be found in the following.

In this recent speech David Green (Director of the U.K. Serious Fraud Office) stated as follows.

“When it comes to prosecutions of corporates, the SFO’s performance is often compared unfavourably to that of US prosecutors. The key reason for this is the much higher bar that we in the SFO face in proving corporate criminal liability. Currently, in order to prove corporate liability, we have to prove that the controlling mind of the corporate was complicit in the relevant criminality.”

In other respects, Green’s speech reads like a political stump speech, not that of a high-profile law enforcement official.

This article in the South China Morning Post titled “Beijing Weighing Large Fines Against GlaxoSmithKline quotes from the China Ministry of Public Security website which states:  “We should learn from the practice of other countries in imposing astronomical fines.”

Quotable

From Jonathan Weil’s Bloomberg View column:

“In the U.S., companies hire powerful people’s children all the time for reasons beyond their obvious skill set. (Chelsea Clinton working at a hedge fund?) And they don’t just bother with the kids — they hire the powerful people themselves. (Do you think Larry Summers got a high-paying job at the hedge fund D.E. Shaw because of his skills as a trader?)

If the feds are going to target wheel-greasing in China — where it can be difficult to get business done without bribing somebody — does this mean we need a Domestic Corrupt Practices Act, too? In Colorado, JPMorgan used to employ Chris Romer as a banker. His father, Roy Romer, was the state’s governor for 12 years. Did that help Chris Romer get hired? It couldn’t have hurt. Do we need a law against this? Of course not.

There are certain facts of life that aren’t worth bringing in the FBI to check out. When rich people with teenage children give millions of dollars to elite universities, there’s a good chance they want special attention from the admissions office for their kids, if not an outright guarantee they will get in. And when owners of companies hire senators’ kids for internships, they probably would like to meet the parents someday.

Perhaps what JPMorgan did in China was worse. We don’t know yet. But let’s not get ahead of ourselves. The decision of whether to hire someone often has less to do with that person’s qualifications than it does with who they are. Life isn’t fair — not in the U.S. and not in China.”

Reading Stack

From Thomas Gorman (Dorsey & Whitney), “The New FCPA Guide:  A Road Map to Crafting an Effective Compliance Defense.”

A client alert from Paul Hastings, “Preparing for Shareholder Lawsuits When Dealing with Foreign Corrupt Practices Act Investigations.”

*****

A good weekend to all.

Friday Roundup

Friday, August 16th, 2013

Wal-Mart’s FCPA expenes continue to grow, scrutiny alerts and updates, in the blink of an eye, and for the reading stack.  It’s all here in the Friday roundup.

Wal-Mart’s FCPA Expenses

As highlighted in this previous post, last FY Wal-Mart’s FCPA professional fees and expenses were approximately $604,000 per working day.  As highlighted in this previous post, for Q1 of this FY Wal-Mart’s FCPA professional fees and expenses were approximately $1.16 million per working day.

Yesterday, in a Q2 earnings conference call, Wal-Mart executives stated:

“Expenses related to FCPA and compliance matters were approximately $82 million, which was above our forecasted range of $65 to $70 million. Approximately $48 million of these expenses represented costs incurred for the ongoing inquiries and investigations. Approximately $34 million is related to global compliance programs and organizational enhancements.”

Doing the math, Wal-Mart’s second quarter FCPA-related professional fees and expenses equal approximately $1.26 million per working day.

In this release, Wal-Mart stated:

“We believe expenses for FCPA matters and compliance programs will be between $75 and $80 million for both the third and fourth quarters.”

The question again ought to be asked – does it really need to cost this much or has FCPA scrutiny turned into a boondoggle for many involved?  For more on this issue, see my article “Big, Bold, and Bizarre: The Foreign Corrupt Practices Act Enters a New Era.

Scrutiny Alerts and Updates

BHP Billiton

The company issued the following release.

“As previously disclosed BHP Billiton received a request for information in August 2009 from the US Securities and Exchange Commission (SEC). As a result the Group commenced an internal investigation and disclosed to relevant authorities including the U.S. Department of Justice (DOJ) evidence that it uncovered regarding possible violations of applicable anti-corruption laws involving interactions with foreign government officials. As has been publicly reported, the Australian Federal Police has indicated that it has commenced an investigation. The Group is fully cooperating with the relevant authorities as it has since the US investigations commenced. As a part of the US process, the SEC and DOJ have recently notified the Group of the issues they consider could form the basis of enforcement actions and discussions are continuing. The issues relate primarily to matters in connection with previously terminated exploration and development efforts, as well as hospitality provided as part of the Company’s sponsorship of the 2008 Beijing Olympics. In light of the continuing nature of the investigations it is not appropriate at this stage for BHP Billiton to comment further or to predict outcomes. BHP Billiton is fully committed to operating with integrity and the Group’s policies specifically prohibit engaging in unethical conduct. BHP Billiton has what it considers to be a world class anti-corruption compliance program.”

For more, see here from The Australian.

Novartis

Add Novartis to the list of pharma companies under scrutiny by Chinese law enforcement for business practices in China.  This Wall Street Journal article states:

“Novartis AG has opened an investigation into possible misconduct at its Chinese operations after a former employee filed a complaint about the Swiss pharmaceutical company’s business practices with labor authorities in China.  Basel-Switzerland based Novartis said … its Business Practices Office, which looks into reported misconduct, is in charge of the investigation. The company said the former employee had asked for 5 million yuan (approximately $800,000) in compensation after resigning but declined to comment further.”

Allied Defense Group

Allied Defense Group (“ADG”) employed Mark Frederick Morales, one of the individuals charged in the failed Africa Sting enforcement action.  As noted in this previous post, in August 2012, the ADG disclosed:

“In February and March, 2012, the DOJ dismissed charges against all individuals indicted in the FCPA sting operation, including the former employee of MECAR USA [an operating business of ADG]. Since this time, the Company’s FCPA counsel has had several discussions with the DOJ and SEC regarding the agencies’ respective inquiries. Based upon these discussions, it appears likely that resolution of these inquiries will involve a payment by the Company to at least one of these government agencies in connection with at least one transaction involving the former employee of Mecar USA. At this point, the amount of this payment is undeterminable.”

ADG recently disclosed:

“In late 2012, the SEC advised that it will not pursue an enforcement action against the Company and in early August 2013, the DOJ advised that it has decided to close its inquiry into this matter.”

In The Blink Of An Eye

As highlighted last week in the Friday Roundup, last week Juniper Networks disclosed:

“The U.S. Securities and Exchange Commission and the U.S. Department of Justice are conducting investigations into possible violations by the Company of the U.S. Foreign Corrupt Practices Act. The Company is cooperating with these agencies regarding these matters. The Company is unable to predict the duration, scope or outcome of these investigations.”

Whether because of three sentences or other information in the company’s quarterly filing, the company’s stock dropped approximately 5.5% last Friday.

72 hours later?

Why of course a securities fraud class action complaint.

This beats the 100 hour threshold highlighted in this previous blink of an eye post.

Reading Stack

A revealing Op-Ed from a member of the Indian Administrative Services in the Times of India which “looks at the games lower bureaucracy plays — sometimes on its own, at other times in collusion with the top — which kill  entrepreneurship and capitalism in India” and which also provide breeding grounds in which harassment bribery flourishes.

An FCPA Mid-Year Update from BakerHostetler.

*****

A good  weekend to all.

Notable RICO Decision And Development

Tuesday, August 6th, 2013

Several FCPA enforcement actions have been brought against foreign companies based on sparse U.S. jurisdiction allegations (a required legal element for an anti-bribery violation against a foreign company).

For instance, the recent Total enforcement action (the third largest in FCPA history in terms of fine and penalty amount) was based on a 1995 wire transfer of $500,000 (representing less than 1% of the alleged bribe payments at issue) from a New York based account.

The JGC Corp. enforcement action was based on the jurisdictional theory that certain alleged bribe payments flowed through U.S. bank accounts and that co-conspirators faxed or e-mailed information into the U.S. in furtherance of the bribery scheme.

The Magyar Telekom enforcement action was based on allegations that a company executive sent two e-mails to a foreign official from his U.S. based e-mail address that passed through, was stored on, and transmitted from servers located in the U.S. and that certain electronic communications made in furtherance of the alleged bribery scheme and the concealment of payments, including drafts of certain agreements and copies of certain contracts with intermediaries, were transmitted by company employees and others through U.S. interstate commerce or stored on computer servers located in the U.S.

The Bridgestone enforcement action was based on allegations that employees sent and received e-mail and fax communications to/from the U.S. in connection with the bribery scheme.

The Tenaris enforcement action was based on allegations that a payment to an agent in connection with the alleged bribery scheme was wired through an intermediary bank located in New York.

The above enforcement actions and the jurisdictional allegations they were based on makes the recent civil RICO decision in PEMEX v. SK Engineering & Construction & Siemens all the more interesting.  As set forth in Judge Louis Stanton’s (S.D.N.Y.) opinion, PEMEX alleged that the defendants violated RICO and common law fraud by bribing PEMEX officials to approve overrun and expenses payments to CONPROCA, a Mexican corporation completing an oil refinery rehabilitation project in Mexico.

According to the complaint, CONPROCA would receive payment from PEMEX’s Project Funding Master Trust (the “Master Trust”), organized under Delaware law, and managed by its then-trustee Bank of New York.  According to the complaint, The Master Trust paid each invoiced amount from its New York account to CONPROCA’s account at Citibank in New York.

The complaint further alleged that CONPROCA financed the project at issue ”through the issuance of bonds registered with the SEC, and through institutional credit, a substantial amount of which were issued by U.S. financial institutions and guaranteed by the Export Import Bank of the United States.”

The DOJ would surely take the position that the above U.S. jurisdictional allegations would be sufficient to bring a criminal FCPA enforcement action against a foreign company for bribing foreign officials.

Not so in a civil RICO action subjected to judicial scrutiny.

In ruling on the defendants’ motion to dismiss based on the argument that the RICO claims were extraterritorial, Judge Stanton first noted that because RICO is silent as to any extraterritorial application, the RICO statutes do not apply extraterritorially.  Judge Stanton then observed that “when foreign actors were the primary operators, victims, and structure of a RICO claim” courts have properly concluded that the claims were extraterritoritial.

Judge Stanton then held that PEMEX’S RICO claims were extraterritorial because “they allege a foreign conspiracy against a foreign victim conducted by foreign defendants participating in foreign enterprises.”

As to those U.S. jurisdictional allegations, Judge Stanton stated:

“They fail to shift the weight of the fraudulent scheme away from Mexico. Seen simply, as a result of the claimed conspiracy PEMEX, the Mexican Plaintiff for whom the work was done in Mexico, paid fraudulent overcharges to CONPROCA, the Mexican corporation which did the work.  PEMEX officials in Mexico granted the challenged approvals to pay CONPROCA. The American trustee merely transferred the payments through two banks in New York.  The defendants’ bribery of PEMEX officials, and CONPROCA’s underbidding and submitting false claims under Mexican public works contracts, all occurred in Mexico. Thus, ‘it is implausible to accept that the thrust of the pattern of racketeering activity was directed at’ the United States.  The RICO claims are accordingly dismissed.”

Judge Stanton’s “thrust” reference is similar to the “sufficient force” language in Justice Alito and Justice Thomas’s concurring opinion in the Kiobel case concerning the extraterritorial application of the Alien Tort Statute.  (See here for the prior post on Kiobel including additional information concerning FCPA jurisdictional issues as to foreign companies).

In addition to the above, another interesting RICO development concerns a lawsuit recently brought by Otto Reich (a former U.S. diplomat and Ambassador to Venezuela) against individuals he accuses of bribing senior Venezuelan officials in exchange for contracts worth hundreds of millions of dollars.”  According to the lawsuit, the individuals are U.S. residents and associated with U.S.-based companies Derwick Associates USA LLC and Derwick Associates Corporation.

In pertinent part, Reich alleges as follows.

“Derwick Associates’ ‘business model’ is simple. From the United States Defendants offer multi-million dollar kickbacks to public officials in Venezuela in exchange for the award of energy-sector construction contracts. Once the contracts are secured for Derwick Associates (and the money ultimately transferred into bank accounts in New York) Defendants skim millions off the top, which they deposit in U.S. banks. Defendants then subcontract out the actual work to be performed on site to other U.S.-based companies, including one based in Missouri. Defendants run their illegal scheme from their homes and offices in New York and through their U.S.-based companies. The scheme has been a huge financial boon to Defendants … all of whom enjoy lifestyles of extreme wealth in the United States.”

It is likely that this civil RICO suit, like others before it, will spawn a DOJ FCPA investigation …  if it hasn’t already.